That, at least, is the word from most economists. This year is the first since then that the national unemployment rate for black Americans has dipped below the double-digit mark-and that feat has only been accomplished in 11 states.
The Fed has signaled its eventual increases in interest rates will be gradual and dependent on economic data.
The U.S. added 215,000 nonfarm payroll jobs in July, according to figures released by the Department of Labor on Friday.
Not all of them do. The central bank said in a statement last week that it needs to see “some further improvement in the labour market” to help justify a rate increase, in addition to being “reasonably confident” that inflation would move back to its 2 per cent goal in the medium term. Pay increases, for example, are still sluggish.
Still, the jobs report indicated that companies are anticipating higher consumer spending.
Chris Williamson, chief economist at Markit, agreed that the rebound in economic data adds to the likelihood of the Fed starting to raise rates.
The Fed has held the benchmark federal funds rate near zero since late 2008 in a bid to support the economy’s recovery from the Great Recession, and has said it would move rates higher carefully so as not to derail growth.
Payroll gains averaged 235 000 over the last three months, the strongest since December through February.
The U.S. job market just demonstrated that it may be nearing full health more than six years after the recession – and showed why the Federal Reserve may be about to raise interest rates from record lows. Barclay’s U.S. Economist, Jesse Hurwitz told CBS News, in advance of the report, that job growth would have to go below 15,000 in July to delay a rate hike. That’s near the 5 percent to 5.2 percent range that the Fed says constitutes a normal job market. In North Carolina, it’s more than 2.6 times as high, and in Pennsylvania and Nevada, it’s more than double the rate for white residents. More jobs were also added in construction. The Fed dropped rates to historically low levels during the depths of the financial crisis in a bid to stimulate growth and stave off panic.
An interest rate hike by the US Federal Reserve Board offers better yields to investors who place their bets on the American currency and US treasury bills. This likely reflects the impact of the Affordable Care Act, as many pre-Medicare age women no longer need to rely on their jobs to get insurance for themselves or family members.
Despite this, the economy’s overall growth has been modest with humble pay rises for workers – average hourly earnings in July increased just 2.1 per cent.
That suggests that employers are still managing to find plenty of workers to fill jobs.
The misgivings about the economy were on display Thursday night at the first Republican presidential debate, where 10 candidates in Cleveland discussed the challenges of an unwieldy tax code and the pressures on American workers resulting from immigration and global trade.
Yellen has flagged this shortcoming: “A significant number of individuals still are not seeking work because they perceive a lack of good job opportunities”, she said in July.